US Sports Betting Tax Revenue Hit $2.48B in 2023, Following a 35% Jump

The benefits of legalized sports betting are being felt across the board in many United States jurisdictions that have regulated the activity within their borders. According to a recent study conducted by online lending marketplace LendingTree, tax revenues in the 39 jurisdictions (38 states plus the District of Columbia) with legal sports betting have soared to nearly $2.5 billion in 2023. This represented a 34.7% year-over-year leap compared to 2022’s $1.84 billion value.

The report from LendingTree partly read:

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“It’s not breaking news that sports betting is big, big business in the country. It is practically impossible to watch any sporting event today- in person or otherwise- without being inundated with advertising for sports betting sites such as DraftKings and FanDuel.”

The Empire State Leads the Way

Ney Work continues to soar since dipping its toes into the regulated gambling realm. The Empire State brought in $876.0 million worth of tax revenue, representing over a third of the nation’s total for 2023. NY debuted regulated online and mobile sports wagering in January 2022, and since then, the state has cruised from one high to the next.

Part of the reason New York is doing so well stems from the upbeat nature of its residents. The stellar figures can also be attributed to its massive population, the highest among the states where sports betting is legal. An even more significant contributing factor is that NY imposes one of the highest tax rates in the country for the activity, at 51%. Such a hefty tax rate puts it head and shoulders above all the other jurisdictions with legal sports betting nationwide.

The $876.0 million revenue figure reported by New York also represents a substantial 24.1% jump compared to the previous. Pennsylvania, the state with the second-highest population among the legal wagering jurisdictions, recorded the second-highest tax revenue at $176.6 million. It is also worth noting that the Keystone State levies a hefty 36% tax rate. Indiana came in third with a $175.4 million tax yield from the activity, followed by Illinois at $161.4 million and Ohio at $136.3 million.

The figures reveal that while some US jurisdictions have historically been veterans in the sports gambling realm, like Pennsylvania, the tides might be changing. Take Ohio, for instance, which legalized sports betting in 2022. Buckeye State, alongside New York, may represent the new heavy hitters in the sports betting world who are shaking things up.

Several States Note Great Revenue Improvements

A closer look at the LendingTree report reveals an excellent state of affairs in the US sports betting. The highlight of significant year-on-year spikes is Ohio, which state reported a mammoth leap from $3.7 million in 2022 to $136.6 million in 2023. The 3,692% jump represents one of the most significant revenue leaps in the US sports wagering sector, catapulting the state to the top 5 performers in revenue rankings.

While the fete, as mentioned above by Ohio, was commendable, it wasn’t the only state that reported significant improvements over the previous calendar year. LendingTree’s research noted that more than 8 states registered annual jumps of 40% or more across the country. The notable increases included Massachusetts with a staggering 11,547.5% increase, Ohio with 3,549.2%, Maryland with 957.1%, and Kansas with 406.4%. The Herculean leaps these performances denote a thriving market, particularly given the relatively newer entries.

That doesn’t mean the older markets aren’t experiencing significant improvements at commendable scales. Four of the older jurisdictions registered laudable improvements, with Alabama recording an 80.7% rise, Nevada, whose stats rose by 71.5%, Colorado, which improved by 46.7%, and finally, Virginia, which had a 40.2% spike.

Additionally, 11 others registered notable double-digit improvements. These included Wyoming, Louisiana, Arizona, New Jersey, New Hampshire, Oklahoma, and Montana, among others. Meanwhile, Alabama and Oklahoma, where only limited sports wagering is legalized, also registered notable increases compared to the previous year, at 80.7% and 14.2%, respectively. These two states offer regulated pari-mutuel wagering, a form of wagering that is synonymous with the likes of horse racing.

Not All States Managed to Secure Increased Revenue

While there has notably been a nationwide boom in sports betting, it’s not been all sunshine and roses in this industry. Several states experienced less revenue from sports betting in 2023 than in 2022. Delaware led the way in the downturn statistics, which experienced a 44.3% dip from the $13.4 million tax revenue reported in 2022 to a measly $7.5 million figure in 2023. Nebraska was the only other state that fell more than 30 points compared to its 2022 figures. With a 36.7% slide, the Cornhusker’s state revenue figures declined from $169,000 to $107,000

Other states with steep declines included North Dakota, with a 27.4% dip; Mississippi, which experienced a 23.3% decrease; Maine, whose revenue shrank by 23%; and Washington, whose revenue dwindled by 21.4%. Other states whose revenues subsided included South Dakota by 19.8%, Rhode Island by 17.6%, Iowa by 10.9%, and Texas by 4.7%. West Virginia and Indiana rounded up the slipping state revenues with lesser slips of 3.0% and 1.3%.

There may be many variables at play to explain the reduced revenue collection. However, upon closer inspection, you’ll find that in many of these jurisdictions, their neighboring states introduced sports betting. Thus, this may have stopped the migration of cross-border players who no longer needed to pass state lines to enjoy gambling. Delaware, for instance, bore the brunt of the introduction of sports betting in Maryland in 2022. A considerable portion of Maryland gamblers were using Delaware facilities beforehand. As such, when the Old Line State legalized wagering, there was no need to move to the neighboring state to bet on sports.

The Sports Betting Train Continues to Gain Traction in the US

LendingTree also conducted a study on 2000 respondents, revealing that a good chunk of American citizens would back the idea of regulating sports betting in all 50 states. According to the survey, 44% of Americans were for the idea, while 18% disagreed. Meanwhile, 38% answered that they were indifferent about it.

As expected, 59% of men favored sports wagering regulation in all states compared to just 30% of women. Nonetheless, this doesn’t reflect opposition to sports betting by the female respondents per se. Instead, 22% of women say they’d not prefer this move compared to 13% of men who aren’t for the idea. The stats also relayed that 48% of women and 28% of men showed indifference.

The older generation of Americans was found to be more strongly opposed to the nationwide legalization of sports betting. 29% of persons aged 60 to 78 opined that they disagreed with the move compared to 27% of bettors aged 18 to 27. The report also proved that higher-earning Americans are more likely to support the legalization than lower-earning Americans.